Leaving funds to individuals with special needs may sometimes prevent them from qualifying for important benefits under the Supplemental Security Income (SSI) and Medicaid programs. These limited benefits programs will not provide them with the assets that would allow them to enjoy a better quality of life, above and beyond the government’s assistance with food and housing costs. But if parents leave any assets to a child (grown or not) who is receiving public benefits, they run the risk of disqualifying the beneficiary from receiving this assistance. Fortunately, the government has established guidelines allowing assets to be held in trust, called a “Special Needs Trust” or “Supplemental Needs Trust”.
A Special Needs Trust should be established as early as possible, but no later than the beneficiary’s 65th birthday. One benefit of having the Trust in place is that if the beneficiary becomes the recipient of gifts, bequests or a settlement from a lawsuit, these funds can be transferred to the Special Needs Trust without affecting that individual’s eligibility for government benefits. Because the funds in the Special Needs Trust are not counted as “available assets” for the purposes of government benefit eligibility, more of this money can be used for those extra expenses that will allow your disabled beneficiary to enjoy a better quality of life.
The creation of a Special Needs Trust will also protect your disabled beneficiary from potential creditor harassment and potentially losing these funds in a lawsuit. Whether you need to discuss establishing a Special Needs Trust to provide for a loved one, or need help administering a Special Needs Trust that is already established, we are here to help.